“After 30 years, 8.9% of all returns lost money!!! In terms of recent debates, (average) r>g does not mean that wealth accumulates automatically. Fortunes can be lost even when the averages are in your favor.

Perhaps even more surprisingly what percentage of investors would you guess earned less than the average payoff of $761.23? An amazing, 69.2% of investors earned less than the average. The median payoff in my simulation was only $446.85, so the median return was not 7% but 5.1%.”

This simulation probably reflects what many individual investors feel when they hear the drumbeat of automatic 7% annual return in the stock market, namely that theory doesn’t match reality. Exit timing and portfolio diversity can greatly alter the return on capital over one’s lifetime.